Prada Group To Acquire Versace For €1.25 Billion

Prada Group has agreed to acquire Versace from Capri Holdings for €1.25 billion ($1.38 billion), the companies said in a statement Thursday.

Prada is borrowing an additional €250 million to invest in relaunching Versace, which turned loss-making last year as it struggles to keep up with bigger, heritage brands amid a global downturn in luxury sales.

The deal is going ahead despite a global market rout sparked by Trump’s trade war, which risks hammering demand for high-end products in addition to clouding the outlook for fashion’s global supply chain. Shares in Michael Kors and Versace parent Capri tumbled 36 percent in a week, before partially recovering Wednesday after Trump announced a 90-day pause on the heftiest tariffs on imports from all countries except China.

In spite of a volatile market that is likely to pinch both strong brands like Prada and struggling rivals like Versace, Prada Group appears to have decided it couldn’t pass up the chance to add one of Italy’s most famous brands to its stable.

Turning around Versace will be a challenge for the group controlled by Miuccia Prada and her husband Patrizio Bertelli, but could provide a new avenue for growth beyond its flagship Prada brand and Miu Miu sister label, as well as helping to fend off consolidation by French groups LVMH and Kering.

“With its highly recognisable aesthetic, the brand constitutes a strongly complementary addition to the Prada Group’s portfolio and displays significant untapped growth potential leveraging multiple value creation levers,” the company said in a statement.

Versace’s estimated revenues fell 19 percent to $810 million in the fiscal year through March, Capri said. That’s roughly in line with the size of the business when the American group acquired it for $2.1 billion in 2018. The brand is hoping to break even by March 2026 after operating margins swung to a high-single-digit loss over the past year.

Last month, Versace named a new artistic director hired from Prada’s Miu Miu label, Dario Vitale, to help revamp its collections. Vitale is a seasoned operator, whose fresh creative vision could revive interest in a brand that’s been designed by co-founder Donatella Versace since 1997.

On the other hand, industry sources say the designer’s exit from Prada Group was fraught. And his appointment could raise concerns among executives that his Versace could cannibalise sales of fast-growing Miu Miu.